As a family clinician in Florida, Dr. C primarily treated retired seniors. Because of the difficulty of diagnosing and treating this age group, he was constantly aware of the looming specter of a malpractice suit. A woman in her 50s proved the most troublesome. In an added twist, Dr. C did not carry malpractice insurance. But he had a good reason—he couldn’t afford it. 

The patient was a 52-year-old woman with chronic cough and occasional hemoptysis. She had smoked two packs of cigarettes a day for the past 30 years. Because of her high risk of lung cancer, Dr. C ordered chest x-rays every three years. Her first set of posteroanterior and lateral chest x-rays came back normal, but three years later, a different set showed a mass in her left lower lobe. This mass turned out to be a malignant adenocarcinoma. 

In addition, hindsight review of the earlier x-rays indicated that the mass was visible on the posteroanterior film. The latest report was sent to Dr. C’s office but was misplaced and not reviewed. After three months, when Dr. C realized that he hadn’t seen the report, he called the radiologist and was shocked to hear the reading and the recommendation for a follow-up CT scan. He referred the patient to a pulmonologist, who ordered a workup for lung cancer. The diagnosis was stage 4 cancer with distant metastases to the brain. The woman was given two months to live but survived for several years. 

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A malpractice suit was filed against Dr. C and the radiologist. An expert’s report indicated that the diagnosis had been missed on the first set of x-rays. To make matters worse, the three-month gap between the second set of x-rays and Dr. C’s follow-up had caused a “loss of chance” of survival. At deposition, the plaintiff’s expert pulmonologist testified that the mass was clearly visible on the first x-ray. The defense’s expert radiologist interpreted the spot as smudge and testified that the x-ray had been read correctly. 

By the end of the depositions, Dr. C had decided to declare bankruptcy. Soon after, the plaintiff’s lawyer dropped Dr. C from the case. As he watched his former co-defendant, the radiologist, suffer under withering questioning, Dr. C was convinced he had made the right decision. In defending his client against missing the diagnosis on the first set of films, the radiologist’s lawyer used the “empty chair” defense, blaming Dr. C for failing to follow up quickly enough after the second set of films showed a mass in the left lung. Ironically, the plaintiff’s lawyer spent much of his time defending Dr. C (who was protected from a judgment by his declaration of bankruptcy) in an effort to pin the blame on the radiologist. 

The patient was awarded $1.4 million. The jury attributed 15% of the blame to the radiologist and 85% to Dr. C. The radiologist’s share was raised to $220,000 thanks to a high/low agreement between his malpractice insurer and the plaintiff’s lawyer. Dr. C was allowed to keep his house, his cars, his medical equipment, his retirement savings, and some cash. He never had to pay off his share of the judgment and continues to practice without insurance.

Legal background

Once Dr. C made the decision to go bare, he and his wife formally partitioned their estate and kept the two sets of marital property separate. This allowed him to declare bankruptcy when it became clear that he could not afford to defend the lawsuit (let alone pay any judgment or settlement). Meanwhile, his wife still had significant resources to support the family. His preparation included all the essential elements of asset protection—early planning, alienation of assets (in this case, through partitioning his estate), and careful timing in filing his bankruptcy.

A high/low agreement sets upper and lower settlement limits that apply no matter how much the jury awards the plaintiff. These agreements are usually kept secret from the judge and jury. Although originally thought to subvert the jury process, high/low agreements are now recognized as a way for both sides to reduce risk. In Dr. C’s case, the jury judgment against the radiologist came to $210,000, but the lawyers had already agreed that $220,000 would be the minimum the plaintiff would collect.

Risk-management principles

Most malpractice suits are not about missing esoteric diagnoses, but rather simple, everyday things that go wrong due to inadequate office procedures and basic human error. Jurors may lack insight into the complexities of a disease, but they are able to easily understand a situation in which an x-ray report is lost or ignored. The evidence in this case did not hinge on whether the radiologist’s original reading was correct, but on the delay in referring the patient and obtaining special diagnostic tests once the evidence of a lung mass was unequivocal. In fact, most of the testimony referred to an absent Dr. C and what he should have done. The essence of the “empty chair” defense used in comparative negligence cases is a shift in blame from a present defendant to one who is absent (through settlement or bankruptcy). 

Until recently, asset protection through alienation was used by clinicians practicing without malpractice insurance as a defense against lawsuits. An uninsured clinician with few seizable assets has been referred to as “judgment-proof.” But a number of legislative changes have made such arrangements less attractive. First, tort reform has made it more difficult to file malpractice suits and has limited the amounts that juries can award in most states. This has resulted in lower average awards, a halt to climbing premiums, and the promise of lower premiums in the future. It has also rendered the expensive and inconvenient alternatives to malpractice insurance less attractive, resulting paradoxically in fewer clinicians making the decision to go bare. Second, the threat of bankruptcy has been a necessary component in avoiding malpractice suits through asset alienation. Recent changes in the bankruptcy code make it more difficult to obtain total forgiveness of debt through Chapter 7, allowing only rescheduling of debt payments through Chapter 13 for applicants who earn above the median income for the state, which would include most clinicians.